Sally Sold Seashells By The Seashore An Introduction to Economics

Sally started his own business. Entrepreneur – Creation – Organization – Risks – Responsibilities

Sally’s Seashell Store competed against a similar business named Oliver’s Ocean Originals. Free Enterpise System – Motivated by Profit (money kept after expenses) – Competition Helps the Consumer – Monopoly, Oligopoly, Perfect Competition

Sally sold collected shells and also offered a guided tour to collect your own shells. Goods – tangible or physical products Services – intangible products Need – required for survival Want – like to have

Sally’s store was a small shack on the beach with tables and bookcases. He hired two kids to collect shells. He also developed a way to locate quality seashells. Factors of Production – Land – Labor – Capital – Entrepreneurship

During tourist season, Sally sells seashells for $2.00 each. He tried to sell them for $3.00, but sales plummeted. Scarcity – allocation of limited resources for unlimited wants Demand – the quantity of goods a consumer is willing and able to buy Elastic Demand – a change in price creates a change in demand Inelastic Demand – a change in price has little effect on the demand for a product

Sally has noticed that he rarely has repeat customers. Diminishing Marginal Utility – people will not buy more than they can reasonably use, regardless of price

Sally has seen prices rise during hurricane season when shells are hard to find. He also saw prices drop when a competitor imported shells from the Pacific ocean. Supply – the amount of a good that producers are willing to provide Surplus – more supply than needed Shortage – less supply than needed Equilibrium – where demand and supply meet

I don’t know how this applies to Sally. Gross Domestic Product (GDP) – total market value of goods and services produced nationwide during a given period of time Federal Reserve – government agency regulating lending to stimulate the economy Business Cycle – periodic pattern of expansion and contraction the economy goes through Inflation – a jump in prices that slow consumer spending Recession – slowing of spending; the Fed lowers the interest rate to promote spending